by landcontract

land contracts are easy but you need to know a few things ….

March 20, 2010 in land contract by landcontract

Dear reader,

After many years of being involved with land contracts it has always amazed me
how little information there is available regarding this unique way of purchasing
and selling real estate. You will not find books on land contracts in your local
bookstore or library. The internet only has scattered bits & pieces of
(mis)information, and the knowledgeable people are unapproachable.
Having answered hundreds of questions from buyers, sellers, realtors, and real
estate investors alike, I came to find that there are typically 3 categories of people
when it comes to land contracts:
 Those who know nothing about them and avoid land contracts
altogether. These are usually people that could have saved thousands of
dollars, or could have made a failing deal work, had they only known about
land contracts.
 Those who know enough about land contracts to be a danger to
themselves. This category of people tends to experiment a bit here and
there with land contracts and usually ends up either losing a lot of money or
worse yet, ends up getting sued. Most of the time this happens due to a lack
of knowledge or due to acting upon the wrong information.
 Those who use land contracts in a professional manner. Here you will
find the occasional buyer or seller that is well informed and that may use
land contracts for his own residence. Here you will also find a group that,
among others, includes investors, note buyers & brokers, certain title
companies and dedicated Realtors. These are the professionals that you
usually do not hear much about. They are either too busy making good
money or they want to protect their little corner of the market by not sharing
too much of their information. The land contract community is typically a
small tight knit group that is hard to penetrate. This is also a community
that is always learning. They stay up-to-date and on the cutting edge.
No matter what category you are in, you can always benefit from new perspectives
and new ideas. When it comes to land contracts there are usually two issues that are
standing between you and your success.
1.> lack of information
2.> your own inertia
I hope to help you with problem # 1. This course should give you plenty of pointers
and new ideas to help you get a better understanding of what land contracts can do
for you.
Problem # 2 is entirely up to you. It has been said so often, but if you do not take
action and do not apply your newly learned lessons, nothing will happen to improve
your situation, and that is guaranteed.
Pete Scheepens
Landcontractsystems.com
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by landcontract

excerpts from the land contract course – advanced applications – money is a commodity

June 30, 2010 in land contract by landcontract

course_excerpts

excerpts from the land contract course material
Chapter VII
Advanced applications

Now that we have touched on most of the basic elements of land contracts I really
want to highlight some of the more creative systems that can be used to turn land
contracts in to a full fledged business concept. Although land contracts have
excellent benefits for the “one time” buyer or seller, they really show their true
potential and power when used in repetition. Buying and selling property on land
contract can be a very solid foundation for many business models that involve
investing in real estate.
I keep telling you that using land contracts is such wonderful technique, and I have
been giving you some examples already. But to really understand the benefits of
land contracts you need to put all the details aside for a minute and look at the big
picture. Sprinkled throughout this course I have already hinted towards banks and
institutional lenders. I have also told you that these companies are in the business
of making money by moving money, and I have told you that they prefer safe and
liquid strategies.
To make sure that you fully understand the power of land contracts I want you
to start thinking like a bank from now on.
As we have seen, banks and institutional lenders purchase mortgage notes, either
one by one, or as large packages that are called portfolios. When you sell a
property on land contract, you really need to think that you are purchasing a note;
just like a bank. Although a bank will usually trade hard cash for a note, you are
trading a piece of property, and in return you receive a note. So although you are
selling a home, in your mind you really have to think “I am buying a note”. Off
course a note buyer has to think the same way. So, looking at this paragraph, it
makes no difference if you are a bank or institutional lender, a home seller, or a
note buyer. Ultimately it all boils down to the same thing.
I hope that by looking at yourself as a bank, it will help you to start thinking big
and in the right direction. Once you deal with land contracts you ARE the bank.
Once you can accept in your mind that you are really functioning as a small bank,
we can move on to the next step and see how you can build a business model by
copying the banks on a smaller scale.
I know that for some of you this concept may be hard to grasp at first. Some
people do not immediately see the link, so let’s look at how a typical bank makes
money at the core.
Money is a commodity!
Banks move money
Banks borrow money so they can move more
Banks attract money from investors so they can move more
Banks buy money so they can move more
When banks move money, they increase the price of money with every move.
Allow me to briefly elaborate on this so you can really start visualizing the links
between playing bank and dealing with land contracts. After that I will dig deeper
in to some details. Let’s look at the statement above in reverse:
When you buy and sell land contracts you are moving assets, but you are really
moving money. When you move money, you increase the price of that money with
every move. You buy your contracts or notes low, and you sell your contracts high.
When you purchase a home on land contract, or better said when you become a
vendee, you are really buying money. You are trading your promise of timely
payment for an asset. The asset is off course the equitable title to a property.
Depending on your perspective, this asset is a commodity that can be moved.
Banks attract money from “investors”. In this case you must read “customers”.
When you open an account at the bank and deposit your money, you increase the
volume of money that the bank can move. You have become an investor from the
bank’s perspective.
Land contract buyers and sellers can also attract customers that deposit money so
that more land contracts can be generated, or more money can be moved. One
example of this is the “smart-buyer” system we described, but there are many other
creative ways to attract money.
Finally, banks also borrow money. You as a land contract buyer and seller can do
the same. You can set up investor pools, go out and get personal loans or business
loans, or attract passive partners so you can move more money.
Banks move money by “wrapping” or “sandwiching” money. They “buy” money
on the

excerpts from the land contract course material

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